The Malaysian government has acquired rights to chips that can embed identity tags into cash, passports or even human bodies.

The government has acquired intellectual property rights to the chip - now dubbed the Malaysian Microchip (MM) - from Japanese research and development (R&D) company FEC, which designed it.

The chip can replace barcode tags in retail goods, and can be inserted into the human body, animals, bullets, credit cards and other items for verification purposes, said the report.

The made-in-Malaysia microchip measuring 0.5 mm X 0.5 mm - the size of a decimal point - uses the radio frequency identification (RFID) chip technology, and costs around six pence each to produce.

A platform for the application of the chip's underlying technology is currently being set up and is scheduled to be completed before the end of the year.

The microchip would be manufactured in Japan early next year but production would eventually move to a factory in Malaysia's northern Kedah state belonging to state-owned wafer fabrication firm Silterra, the country's Prime Minister Mahathir Mohamad said in the report.

The MM is a multi-band RFID chip, which means that it would also be usable in the US and Europe, which have adopted a different RFID frequency standard from that in Japan, FEC officials said in the report.

Japanese firms are at the forefront of RFID technology. Hitachi, for example, is rumoured to be developing a speck-sized radio chip to be embedded into Euro currency notes as a security measure. At a recent Japan trade show, a demonstration of RFID technology allows retailers to track the movements of a consumer in a book store.